Tax-and-Spend Twittering

Posted on
July 15, 2009

On July 14, House Democratsreleased their health care bill and Republicans were quick to criticize it. Former House Speaker Newt Gingrich took to Twitter, typing out: “The liberal health bill introduced by pelosi is a disaster. $1.5 trillion in new spending. Tax increases on virtually everyone.”

Gingrich wasn’t the only one to say the bill would cost $1.5 trillion (over 10 years, that is), but the other person who said it remains anonymous. The nonpartisan Congressional Budget Office, however, did go on record as saying the bill would have a net cost of $1 trillion over 10 years — not quite as huge as Gingrich said.

The extra $500 billion was tacked on by an unnamed House Democratic aide who, according to the Associated Press, estimated that the price tag would be $1.5 trillion. The CBO said its figures weren’t a “formal or complete cost estimate,” and it noted that it didn’t factor in “administrative costs … of implementing the specified policies nor all of the proposal’s likely effects on spending for other federal programs.” But the CBO doesn’t expect that those aspects will have a “sizable impact” on its preliminary figures.

The Washington Post-owned WhoRunsGov.com reported that House Democrats, including the spokesman for the House Ways and Means Committee, were none too happy about the AP report. The Washington Post itself, meanwhile, reported that, according to unnamed Democratic aides, the cost of the bill would be somewhere in between the Gingrich-touted and CBO-reported figures — $1.2 trillion.

As for Gingrich’s twittered claim that the legislation would increase taxes on “virtually everyone,” that’s not the case. The proposal would increase taxes on those with adjusted gross incomes above $280,000 a year or $350,000 a year for couples. That’s not a whole lot of people. The nonpartisan Tax Policy Center projected a little less than 2.2 million households (1.4 percent of all households) would face higher taxes under the proposal. The surtax for those upper-income folks would start at 1 percent and go up to 5.4 percent with top incomes over $1 million. (This New York Times post explains how the surtax would work.)

Beyond that, individuals who don’t have health insurance and don’t qualify for government subsidies, will face penalties — of 2.5 percent of their income. And businesses with payrolls of more than $250,000 would have to either provide insurance for their employees or pay up to 8 percent of their payroll as part of a “play or pay” requirement. Perhaps Gingrich was referring to these provisions, but not everyone, of course, would pay the penalties.

The CBO estimates that the payments from individuals who didn’t get coverage would total $29 billion over 10 years, and the employer pay-or-play fees would bring in $163 billion in federal revenue over that time period. The plan would also, according to the CBO, decrease the number of the uninsured by 37 million and increase the number with employer-provided insurance by 2 million by 2019.

With some employers exempt from any fee, many employers still projected to provide coverage, and a decrease in the uninsured by tens of millions of people, we don’t see how this plan could amount to a tax on “virtually everyone.”

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Q: Will people living in the U.S. illegally receive “amnesty bonuses” because of President Obama’s executive actions on immigration? A: There is no automatic payment, but some working immigrants could claim up to four years of earned income tax credits if they meet eligibility requirements.